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China well on way to more balanced economy

2012-07-24 16:11:54Source:XinhuaAuthor:

China's economic growth is expected to rebound in the second half of 2012 and the country is well on the way to achieving more balanced growth, according to analysts in Kuala Lumpur.
 
China's National Bureau of Statistics said earlier this month the nation's GDP grew 7.6 percent in the second quarter, the lowest growth since the second quarter of 2009.
 
However, analysts said the dip was expected and China's economy was likely to grow at a faster pace in the second half of the year, voicing confidence in China's economy.
 
Prasenjit Kumar Basu, an economist at leading Malaysian investment bank Maybank Kim Eng, said China's economic growth had rebounded since April.
 
"For China, it is important to consider the monthly data, which suggest that the economy reached its cyclical trough in April 2012, and began a modest recovery in the subsequent two months," he told Xinhua in a recent interview.
 
In a report published after the announcement of the second quarter GDP data, Basu said the impact of a strong rebound in bank lending in May and June as well as the additional policy rate cut by the central bank might be seen during the rest of the year.
 
Maybank Kim Eng maintains its prediction of a real GDP growth of 8 percent for China this year.
 
Basu's view was echoed by Anthony Dass, an economist with Malaysian Industrial Development Finance Berhad, an investment research house.
 
"The second quarter of 2012 growth was above our expectation and we believe the economy should improve further in the second half of 2012," Dass told Xinhua.
 
Basu suggested that a slowdown in growth was actually good for China, as it would help reduce some of the internal imbalances in the economy.
 
He praised the Chinese government's bid to restructure the economy by boosting domestic demand while lessening its dependence on external trade and investment.
 
"China is well on the way to achieving a more balanced pattern of growth in the medium term, with private consumption playing a more important role," he said.
 
Though concerned that the stimulus might worsen the imbalance in near term, Basu said China's current policy of easing monetary policy while retaining the curbs on speculative property purchases was the right mix.
 
China's economic performance is closely watched by Malaysian analysts, partly because bilateral trade between the two countries is booming in recent years.
 
According to the latest figures from Malaysia's Ministry of International Trade and Industry, China remained Malaysia's biggest import source and trading partner during the first five months of 2012.
 
"With the second quarter of 2012 assumed to have reached the 'trough' and expecting upside in the second half of 2012, it should bode well for Malaysia's economy, given that our exposure to China is about 13 percent of GDP in terms of direct trade," Dass said.
 
He considered China's focus on domestic consumption a new support for the Malaysian economy.
 
"An increase in domestic consumption in China should benefit Malaysia as our exposure to China's household sector is about 16 percent at the moment, while to domestic investment it is about 20 percent," he noted.
 
"Hence, when domestic consumption improves, it also means that Malaysia's exposure to China's households is poised to increase to some extent," he said.